Facts

No matter what the circumstances or situation, a car repossession will hurt your credit rating, reports Dr. Don Taylor of Bank Rate. Mitigating the effects of a car possession remains your best option.

Types

You can have the creditor forcibly take your car away, or you can go to the lender and voluntarily "give up" the car, reports Bills.com. While both are considered "repossession", voluntarily repossession costs you less in administrative costs.

Features

A repossession on your credit report will make most lenders view you as a very risky client, reports Loans.com. In addition, you must pay the difference for what the repossessed car sells for and what you owe. Not paying the leftover balance will negatively affect your credit further.

Time Frame

Car possessions stay on your credit report for seven years, reports Bank Rate.

Prevention/Solution

Consider letting your car loan default or voluntarily giving up the car as a last resort, reports the U.S. Federal Trade Commission. Creditors want you to pay your bills and will most likely work with you on a payment plan you can afford.

Source:

BankRate.com; Cosigner Blues; Don Taylor

Bills.com; All about voluntary repossession

Loans.com; Effects of Repossession on Your Credit Report

Resource:

U.S. Federal Trade Commission; Vehicle Repossession: Understanding the Rules of the Road